SEC Adopts Transaction Fee Pilot for NMS Stocks

On December 19, the US Securities and Exchange Commission announced that it had voted to conduct a Transaction Fee Pilot in national market system (NMS) stocks, following a recommendation from the Equity Market Structure Advisory Committee. The SEC is initiating the Pilot to study the effects of exchange transaction fee and rebate pricing models on order routing behavior, execution quality and market quality generally, and to assess whether further regulatory action is required in this area.

The Transaction Fee Pilot will apply to all stock exchanges. While one test group will restrict the ability of exchanges to offer rebates and linked pricing, the other group will test a fee cap of $0.0010. The SEC intends to issue a list of pilot securities approximately one month before the Transaction Fee Pilot begins.